Markets are striking a more optimistic tone at the beginning of the week. Some governments are targeting Easter as a time to begin rolling
MARKETS
The Dow Jones ended off its lows on Monday, as investors snapped up beaten-down tech names to push the broader sector into positive territory, though falling hopes of further fiscal stimulus weighed on investor sentiment.
The Dow Jones fell 1.84% while the Nasdaq ended almost flat (-0.13%). The EuroStoxx 50 declined by -3.7% led by a -8% decline of Deutsche Bank (DE:DBKGn). Gold was down -2.2% while Silver crashed by almost -9% as the dollar soared. Overnight, Asian stocks extended losses for the second day.
DAY AHEAD
For the day ahead, I’ll be watching investor reaction to yesterday’s big risk-off day across markets, Tesla’s so-called ‘Battery day’ and the testimony from Fed Chair Jay Powell.
Yesterday was a classic risk-off moment where the stocks and crypto slumped, while Treasuries, the US dollar and the yen all rallied. Tech stocks have been pulling back for a couple of weeks but yesterday the sell-off was broader with industrials in the Dow hit hard. The price of silver was down 10% at one point on Monday.
There didn’t seem to be one specific trigger baring perhaps the leaked FinCEN report and its effect on European bank stocks. Some also argued the sad passing of Justice Ruth Bader Ginsburg and the partisan squabbling over her replacement in the Supreme court has made a new US stimulus bill even less likely. If the decline is just sentiment driven, then it makes the chance of a snap back the next day higher- though its worth noting some key technical levels including the 50 DMA in the S&P 500 have given way- favouring more downside.
Tesla’s battery day is part PR stunt part something substantial for the future of EVs. Every new generation of Tesla’s batteries should be able to hold store more energy and have a longer life- thus improve electric vehicle range and cost to something the masses will be comfortable adopting.
Powell testifies for one out of three occasions this week on Tuesday before the House Financial Services Committee on the CARES act - i.e. the first stimulus bill.
For those in the UK, Prime Minister Boris Johnson is expected to announce further lockdown restrictions in a statement to the House of Commons around mid-day.